Landlords: How Should You Manage Tenancy Deposit Disputes?

According to recent data from the Tenant Deposit Scheme (TDS), the most common cause of tenancy deposit disputes is cleaning in the private rented sector. Disputes are also on the rise due to problems with rent arrears.

Nonetheless, the other major cause of arguments over deposits is damage, accounting for 51% of cases.

“Regardless of other issues, the condition a property is in, remains a significant factor in landlord-tenant disputes,” remarks Dominic Baines of No Letting Go.

Tenancy Deposit and Responsibilities

Once a tenant has paid their deposit, the landlord must protect it in a deposit protection scheme. According to the law, neither the landlord nor the tenant must have access to the deposit during the tenancy. However, the main issue is what happens after this, if the landlord deducts the deposit when the tenancy ends.

“Deposit deductions are a major cause of disagreements between tenants and their landlords, with around 30% of all tenancies ending in deposit deductions, and some of these involve losing the entire deposit”

Why Deposit Deductions?

Along with issues over cleaning of the property or lack of sufficient hygiene, damage to the property or its contents are the main causes for deposit deductions.

“These are the common reasons why tenants lose part of their deposit,” Dominic comments, “whereas stolen or missing property usually results in a loss of the total deposit.”

“Direct damage such as cigarette burns, holes in walls and broken furniture can all contribute to a partial loss of the tenant’s deposit,” Dominic also points out.

There is also the question of fair wear and tear. This is officially defined as: reasonable use of the premises by the tenant and the ordinary operation of natural forces – in other words, natural deterioration.

“This can become a point of contention,” Dominic says, “whether the cause of the damage justifies deducting the deposit.”

The Importance of an Inventory

Resolving tenancy deposit disputes requires evidence. The best way to gather this is through a professional property inventory.

“A thorough inventory check is crucial, as it will state the condition of the property at the start of the tenancy, and it then becomes the benchmark for assessing the condition of the property when the tenancy ends”

Recording the condition of the property should include detailed notes and photographs and, ideally, this needs to come in the form of an impartial document.

“Check-in inventories, plus interim inspections and a check at the end of the tenancy make up a full cycle of work, which provides the critical evidence in tenancy deposit disputes,” Dominic concludes.